Owning a second home sounds like success. Many families buy one thinking it will bring extra income and long-term security.
But what I have seen is often the opposite.
A friend of mine bought a second flat in Pune a few years ago. He believed the rent would cover his loan EMI and that the flat would grow in value over time. Instead, the apartment stayed empty for months. When he finally found a tenant, the rent was about ₹18,000 a month, while his EMI was nearly ₹35,000. Add ₹3,000 in monthly maintenance charges and annual property tax, and the numbers never worked.
The truth is that rental yields in India are among the lowest in the world.
On average, families earn only 2 to 3 per cent of a property’s value each year as rent. That means a ₹1 crore flat barely fetches ₹20,000 to ₹25,000 a month. A bank deposit of the same amount earns nearly three times as much without the stress. And the costs of upkeep never stop, even when the flat is empty.
This is why my assessment is clear. Second homes look like assets, but for many families they turn into liabilities.
Why second homes fail in practice
The real weakness of a second home is beyond rent, actually. It is the way the math and the lived reality combine. On paper, a flat looks like a steady asset. In practice, it behaves like a slow leak.
At the time of purchase, most families focus only on the price of the flat and the rent they earn. But the real cost is higher. Stamp duty, registration, interiors, and brokerage add 7 to 10 per cent more to the bill. A ₹1 crore home often costs closer to ₹1.1 crore before it is ready.
Few buyers calculate the return on that full amount.
Once the home is bought, the expenses do not pause. There is monthly society maintenance, property tax, and utility minimums even when the flat is empty. Reasonably premium buildings levy ₹2,000 to ₹5,000 every month for services. Better ones could be three times as much, if not more. If a lift breaks down or a new generator is installed, societies pass one-time charges that can run into lakhs. Owners are often surprised by these hidden costs, which rarely feature in the initial investment pitch.
Rental income is also more fragile than it seems. Tenants negotiate harder than brokers admit, so the actual rent is often 10 to 15 per cent lower than expected. Occupancy is never a full twelve months a year. A vacancy of even two months wipes out a big chunk of the annual return. Each change of tenant brings repainting, plumbing fixes, and a broker’s fee.
By the time all this is paid, what looked like a 3 per cent yield can shrink to 2 per cent or less.
The other reality is illiquidity.
Unlike a fixed deposit or a mutual fund, you cannot exit a second home quickly. Selling takes months and sometimes years. Families who realise they are sinking money into a flat often hold on, hoping prices will rise. But while they wait, the outflows continue. The flat that was meant to provide security slowly becomes a burden.
Beyond money, there is the constant attention a second home demands. Late rent, leaking taps, repainting, and finding new tenants – these are not numbers in a spreadsheet; they are interruptions in real life. Many families do not factor in this hidden cost of time and energy.
Over the years, this strain often weighs more heavily than the cash outflow itself.
When a second home can still make sense
I do not believe second homes are always a mistake. There are situations where they are sensible, but these are far narrower than what many assume.
They can work when there is clear personal use. If parents need a stable house in another city, or if you spend significant time in a vacation spot, then a second home has practical value. In such cases, it should be seen as a lifestyle choice, not an investment.
They can also work when purchased without leverage and with true surplus funds. A family that already owns its primary home, has no debt, and holds a strong portfolio of financial assets can buy a second home in cash without risking strain. In such cases, the modest rent is a bonus and the property is just one more asset class.
Location matters as well. A flat in a high-demand rental pocket near business districts, transit hubs, or universities may have higher occupancy and slightly better yields. A 4 percent return with low vacancy is better than a 2 percent return with long periods of emptiness. The strength of the local rental market often decides whether a second home behaves like an asset or a burden.
Finally, there are families who buy with the intention of legacy. A house in the native town, or a second flat meant for children in the future, carries emotional value. In such cases, the yardstick is not yield or appreciation but continuity. If seen in that light, the expectations shift.
The key across all these cases is clarity. If the purpose is lifestyle, call it lifestyle. If it is rental income, run the numbers conservatively. If it is legacy, accept the emotional cost. Without clarity, second homes slip easily from pride to pressure.
A plea before you buy
When I hear families talk about second homes, I understand the appeal. It feels safe, solid, and aspirational. But I have also seen what happens when the rent does not match the EMI, when the maintenance bills keep coming, and when the flat stays locked while money leaves the account every month. The pride of ownership can quickly turn into frustration and regret.
This is why I say: pause before you commit. Do not assume rent will cover costs. Do not ignore vacancies. Do not buy only because friends or relatives have bought. Ask yourself whether you truly need this property, whether you can carry it through bad years, and whether your money will work harder elsewhere.
A second home should give comfort, not create stress. For too many families I know, it has done the opposite. Learn from their experience before repeating it. The roof you already have may be the only one you really need.
Author Note
Note: This article relies on data from fund reports, index history, and public disclosures. We have used our own assumptions for analysis and illustrations.
The purpose of this article is to share insights, data points, and thought-provoking perspectives on investing. It is not investment advice. If you wish to act on any investment idea, you are strongly advised to consult a qualified advisor. This article is strictly for educational purposes. The views expressed are personal and do not reflect those of my current or past employers.
Parth Parikh has over a decade of experience in finance and research. He currently heads growth and content strategy at Finsire, where he works on investor education initiatives and products like Loan Against Mutual Funds (LAMF) and financial data solutions for banks and fintechs.